The time has come to take a close look at the minimum insurance requirements for trucking, says the Federal Motor Carrier Safety Administration.

In a new report to Congress the agency said it is clear that the current minimums need to be reevaluated.

The last adjustment was in 1985. It set the current standard of $750,000 for general freight, $5 million for the most dangerous hazmats and $1 million for other hazmats.

The agency has formed a team to draft a new rule and considers this a high priority.

This initiative arises from a study ordered by Congress in the 2012 highway law, MAP-21, in response to the increasing costs of crashes. As it drafted the law, Congress considered raising the insurance minimum for general freight from $750,000 to $1 million, but eventually decided to have the agency prepare an analysis that could become the basis for changes in the standard. Congress also ordered the agency to conduct a review every four years, going forward.

The agency found that catastrophic crashes whose costs exceed current minimums are rare – just 1% of crashes fall into that category. But when they do happen the costs can easily exceed the current $1 million minimum.

This is due mainly to increased medical costs. The medical consumer price index has outpaced inflation in all but one of the past 29 years, the agency said.

If the minimums were pegged to the medical CPI, general freight would require $3.2 million, dangerous hazmats would require $21.3 million and other hazmats would require $4.3 million.

Even if the minimums were pegged to the lesser standard of core CPI, they still would be significantly higher: $1.6 million for general freight, $10.8 million for dangerous hazmats and $2.2 million for other hazmats.

The agency also found that insurance rates have declined slightly since the 1980s, and that it is difficult to find data on what premiums would cost if the minimums are increased. Insurers are protective of their clients and pricing, so information about costs is generic and limited, the agency said.

The study focused mainly on freight carriers but it applicable to buses and hazmat carriers as well, the agency said.

The agency said its research is supplemented by findings in other studies.

One 2013 study by the Pacific Institute for Research and Evaluation recommended a minimum of $10 million, to be indexed to inflation and productivity growth.

Another by the Trucking Alliance, a group of seven carriers that lobby for safety legislation on Capitol Hill, underscored the agency’s finding that catastrophic crashes can easily lead to costs that are well above the minimums.

The amounts in these settlements were enough to create an uninsured liability of 42% for the companies, the Trucking Alliance found.

An American Trucking Associations review offered a different take on the issue. ATA looked at the risk of a carrier experiencing a crash whose costs exceed the minimums. It found a 1.4% chance of a claim exceeding $500,000, a 0.73% chance of going over $1 million and a 0.31% chance of going over $2 million. The average cost of claims between 2006 and 2011 was $11,229, ATA found.

The issue is likely to resonate as Congress drafts the next highway bill. Rep. Matt Cartwright, D-Pa., has a bill that would raise the $750,000 minimum to $4,422,000 and adjust it annually based on the medical CPI.

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